Foundations of International Macroeconomics [antikvár]

Preface The goal of this book is to develop a broad coherent framework for thinking about all of the fundamental problems in international macroeconomics. We are unaware of any previous attempt to accomplish this goal using modem analytical methods. This project arose from our concern over the widespread view that open-economy macroeconomics (also known as international finance) has become an extremely scattered field, defined more by the people who consider themselves working in it than by any set of unifying ideas. The problem was brought home forcefully in an informal survey conducted by Professor Alan Deardorff of the University of Michigan. In 1990, Deardorff gathered graduate international finance reading lists from eight top economics departments, hoping to find a consensus on which readings should be deemed most essential. To his surprise, he found strikingly Uttle agreement, with only one article appearing on more than half the reading lists. Such idiosyncrasies will come as no surprise to those who have studied international macroeconomics in graduate school. Whereas most students find the major issues compelling, a constant complaint is that the material lacks a unified theme and that radical gear shifts are needed to move from one topic to the next. Some senior economists at leading departments view the state of the field with such dismay that they teach mosfly from articles written in the 1960s and 1970s (or at least articles that should have been written then), disdaining the modem literature for its alleged lack of policy relevance. Unfortunately, that approach is not productive for graduate students who need a vision of the field's present and its future. While the classic hterature from twenty and thirty years ago can be admired for articulating and attempting to formalize a number of central policy issues, its limitations are many. The classic approach lacks the microfoundations needed for internal consistency, it fails to deal with dynamics in any coherent way, and its vision of capital market integration may generously be described as narrow. Perhaps most importantly, the older literature simply doesn't deal sensibly with many questions that are central to today's policy world, such as current accounts, government budget deficits, speculative attacks, and the implications of the expanding global markets for securities and derivatives. Our goal in this book is to show that one can address virtually all the core issues in intemational finance within a systematic modern approach that pays attention to the nuances of microfoundations without squeezing all life out of this fascinating topic. We knew at the outset that our project was an ambitious one, and we plunged ahead despite having no idea how we would cross some of the vast chasms in the field. We realized that many areas would have to be substantially reformulated, and frankly hoped that some of the gaps would be fortuitously filled in by other researchers over the life of the project. This did happen, but only in small doses. One important missing link we tackled involved bridging the gap between modem flexible-price maximizing models of the current account and the older sticky-price